Are you working on rebuilding your financial stability after a setback or challenge? Whether it’s a job loss, accident or unanticipated expense, you’re likely wondering how this setback will affect your financial goals and priorities, such as purchasing a home, particularly if your credit score has been affected.
Experiencing a financial setback doesn’t mean you’ll need to give up on your dreams. Even if your credit rating is less than optimal, it is still possible to qualify for a mortgage. There are, however, a few things you’ll need to consider:
Know Where You Stand
Although you may be aware that your credit rating isn’t great, it’s important to know exactly where you stand. It’s also important to understand exactly what a credit score is and how you can move from bad to good credit.
Basically, a credit score is a numerical rating based on your credit report. Your credit report takes into account a few different factors including how long you’ve had credit, whether you carry a balance on your credit cards, whether you regularly miss payments, the amount of debt you carry and whether you’ve filed for bankruptcy or filed a consumer proposal in the past.
Making regular payments, working on lowering the amount of debt you carry or any other behaviour that demonstrates responsible use of credit can help to improve and rebuild your credit score to put you back on the road to that dream home.
In addition to doing a little credit report research, it’s also a good idea to consider whether it’s the best time for you and your family to purchase a home. Remember to consider the extra costs that come along with homeownership including extra expenses like heating, property taxes and home repairs that can certainly add up. If you’re curious as to the extra costs that you might incur take a look at my calculator tool. It can help you figure out the costs associated with owning a home and can help you determine whether now is the right time to buy.
You Also Need To Understand Your Options
If you’ve determined that it is the right time to purchase a home, it’s important to understand your options. Mortgage lenders not only consider your credit score when reviewing your application, they also look at your income and the amount of debt you currently carry, so it’s important to continue to focus on reducing any debts you have and demonstrating responsible use of credit.
It’s also important to know that a larger down payment may be necessary if your credit score is low. Having a larger down payment means you’ll need to borrow less and will increase the likelihood that you’ll be approved but there are a few options we can take a look at if you don’t have a large down payment too.
Finally, for those left with bad credit after a financial setback, it may also be necessary to use a co-signer in order to get approved. Although this can be a bit discouraging, remember that a co-signor just simply helps to strengthen your application and increase the likelihood that your mortgage will be approved.
Lastly, don’t forget! If you’re not sure whether your credit rating will impact your ability to qualify for a mortgage. I can help! As an accredited, experienced mortgage broker in Barrie, I can answer any questions you might have and work with you in order to make your financial goals, like buying a home, a reality. Just give me a call at 705-315-0516 and let’s talk options.